What changed in this filing

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Item 1. Financial Statements

2021-08-06 compared with 2021-05-10 · 181 added, 118 removed, 654 unchanged (31% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Assets (In thousands, except par value)

5 unchanged sentences

Prepaid expenses and other assets 61,795 66,705

Income tax receivable 611 —

Total current assets 2,400,211 2,413,423

Investment securities available-for-sale, at fair value 1,090,513 970,969

Loans to bank customers, net of allowance for loan losses of $ 1,531 and $ 757 as of March 31, 2021 and December 31, 2020, respectively

Loans to bank customers, net of allowance for loan losses of $ 6,693 and $ 757 as of June 30, 2021 and December 31, 2020, respectively

27,355 21,011

25 unchanged sentences

Class A common stock, $ 0.001 par value;

100,000 shares authorized as of March 31, 2021 and December 31, 2020;

54,389 and 54,034 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

100,000 shares authorized as of June 30, 2021 and December 31, 2020;

54,640 and 54,034 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 375,551 354,460

6 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(In thousands, except per share data)

13 unchanged sentences

Interest expense, net 38 443 75 684

Other (expense) income, net ( 1,086 ) 192

Other income, net 1,633 2,154 547 2,346

Income before income taxes 33,398 7,101 66,260 65,901

12 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(In thousands)

Net income $ 24,933 $ 3,294 $ 50,668 $ 50,139

Other comprehensive (loss) income

Unrealized holding (loss) gain, net of tax ( 22,544 ) 4,157

Comprehensive income $ 3,191 $ 51,002

Other comprehensive income (loss)

Unrealized holding gain (loss), net of tax 8,652 ( 4,006 ) ( 13,892 ) 151

Comprehensive income (loss) $ 33,585 $ ( 712 ) $ 36,776 $ 50,290

See notes to unaudited consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Class A Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity

1 unchanged sentence

(In thousands)

Balance at March 31, 2021 54,389 $ 54 $ 364,926 $ 677,625 $ ( 19,116 ) $ 1,023,489

Common stock issued under stock plans, net of withholdings and related tax effects 251 1 2,259 — — 2,260

Stock-based compensation — — 8,366 — — 8,366

Net income — — — 24,933 — 24,933

Other comprehensive income — — — — 8,652 8,652

Balance at June 30, 2021 54,640 $ 55 $ 375,551 $ 702,558 $ ( 10,464 ) $ 1,067,700

Three Months Ended June 30, 2020

Class A Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income Total Stockholders' Equity

Shares Amount

(In thousands)

Balance at March 31, 2020 52,854 $ 53 $ 306,151 $ 675,604 $ 6,197 $ 988,005

Common stock issued under stock plans, net of withholdings and related tax effects 443 — 3,330 — — 3,330

Stock-based compensation — — 13,602 — — 13,602

Net income — — — 3,294 — 3,294

Other comprehensive loss — — — — ( 4,006 ) ( 4,006 )

Balance at June 30, 2020 53,297 $ 53 $ 323,083 $ 678,898 $ 2,191 $ 1,004,225

See notes to unaudited consolidated financial statements

GREEN DOT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

Six Months Ended June 30, 2021

Class A Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity

Shares Amount

(In thousands)

Balance at December 31, 2020 54,034 $ 54 $ 354,460 $ 651,890 $ 3,428 $ 1,009,832

3 unchanged sentences

Other comprehensive loss — — — — ( 13,892 ) ( 13,892 )

Balance at March 31, 2021 54,389 $ 54 $ 364,926 $ 677,625 $ ( 19,116 ) $ 1,023,489

Three Months Ended March 31, 2020

Balance at June 30, 2021 54,640 $ 55 $ 375,551 $ 702,558 $ ( 10,464 ) $ 1,067,700

Six Months Ended June 30, 2020

Class A Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income Total Stockholders' Equity

9 unchanged sentences

2016-13 (CECL) — — — ( 281 ) — ( 281 )

Balance at March 31, 2020 52,854 $ 53 $ 306,151 $ 675,604 $ 6,197 $ 988,005

Balance at June 30, 2020 53,297 $ 53 $ 323,083 $ 678,898 $ 2,191 $ 1,004,225

See notes to unaudited consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands)

5 unchanged sentences

Provision for uncollectible overdrawn accounts from purchase transactions 10,213 4,398

Provision for loan losses 10,143 254

Stock-based compensation 25,603 24,987

Losses (earnings) in equity method investments 875 ( 223 )

(Earnings) losses in equity method investments ( 578 ) 2,716

Realized gain on sale of available-for-sale investment securities — ( 5,062 )

Amortization of premium on available-for-sale investment securities 1,588 432

Amortization of deferred financing costs 84 84

Impairment of long-lived assets — 1,088

Changes in operating assets and liabilities:

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Proceeds from maturities of available-for-sale securities 72,666 61,717

Proceeds from sales of available-for-sale securities 5,198 10,047

Proceeds from sales and calls of available-for-sale securities 5,198 187,668

Payments for acquisition of property and equipment ( 23,826 ) ( 31,395 )

1 unchanged sentence

Investment in TailFin Labs, LLC ( 35,000 ) ( 35,000 )

Purchase of bank-owned life insurance policies ( 50,000 ) —

Other ( 599 ) ( 832 )

13 unchanged sentences

Cash paid for interest $ 274 $ 759

Cash refund from income taxes $ ( 20 ) $ ( 95 )

Cash paid for income taxes $ 17,289 $ 34

Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period:

17 unchanged sentences

Reference is made to our Annual Report on Form 10-K for the year ended December 31, 2020 for additional disclosures, including a summary of our significant accounting policies.

There have been no material changes to our significant accounting policies during the three months ended March 31, 2021, other than the adoption of the accounting pronouncements discussed herein.

There have been no material changes to our significant accounting policies during the six months ended June 30, 2021, other than the adoption of the accounting pronouncements discussed herein.

In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal and recurring items, necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods presented.

2 unchanged sentences

accordingly, accounting estimates require the exercise of judgment.

These financial statements were prepared using information reasonably available as of March 31, 2021 and through the date of this report.

These financial statements were prepared using information reasonably available as of June 30, 2021 and through the date of this report.

The accounting estimates used in the preparation of our consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained, and as our operating environment changes.

21 unchanged sentences

Upon adoption, the guidance must be applied prospectively for all eligible contract modifications.

We continue to monitor the impact of ASU 2020-04 as reference rate reform continues to develop, however, do not expect any material impact on our consolidated financial statements as our revolving line of credit is based on variable rates available that we elect at the time of borrowing.

We do not expect any material impact on our consolidated financial statements as our existing revolving line of credit is based on variable rates available that we elect at the time of borrowing.

See Note 9 — Debt, to these consolidated financial statements for additional information.

Note 3— Revenues

Disaggregation of Revenues

As discussed in Note 19 — Segment Informatio n, we determine our operating segments based on how our chief operating decision maker manages our operations, makes operating decisions and evaluates operating performance.

2 unchanged sentences

The following table disaggregates our revenues earned from external customers by each of our reportable segments:

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Consumer Services B2B Services Money Movement Services Total

4 unchanged sentences

$ 176,430 $ 123,428 $ 66,019 $ 365,877

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Consumer Services B2B Services Money Movement Services Total

4 unchanged sentences

$ 156,192 $ 92,242 $ 65,667 $ 314,101

Six Months Ended June 30, 2021

Consumer Services B2B Services Money Movement Services Total

Timing of recognition (In thousands)

Transferred point in time $ 226,576 $ 91,875 $ 153,835 $ 472,286

Transferred over time 128,532 150,661 2,551 281,744

Operating revenues (1)

$ 355,108 $ 242,536 $ 156,386 $ 754,030

Six Months Ended June 30, 2020

Consumer Services B2B Services Money Movement Services Total

Timing of recognition (In thousands)

Transferred point in time $ 188,730 $ 90,574 $ 182,934 $ 462,238

Transferred over time 113,707 90,697 2,785 207,189

Operating revenues (1)

$ 302,437 $ 181,271 $ 185,719 $ 669,427

(1) Excludes net interest income, a component of total operating revenues, as it is outside the scope of ASC 606, Revenues.

Also excludes the effects of intersegment revenues.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 3—Revenues (continued)

Revenues recognized at a point in time are comprised of ATM fees, interchange, and other similar transaction-based fees.

1 unchanged sentence

Substantially all of our money movement services are recognized at a point in time.

Contract Balances

As disclosed on our Consolidated Balance Sheets, we record deferred revenue for any upfront payments received in advance of our performance obligations being satisfied.

These contract liabilities consist principally of unearned new card fees and monthly maintenance fees.

We recognized approximately $ 17.6 million and $ 17.0 million in revenue for the three months ended March 31, 2021 and 2020, respectively, that were included in deferred revenue at the beginning of the periods and did not recognize any revenue during these periods from performance

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 3—Revenues (continued)

obligations satisfied in previous periods.

We recognized approximately $ 9.1 million and $ 8.9 million in revenue for the three months ended June 30, 2021 and 2020, respectively, and $ 26.6 million and $ 25.9 million for the six months ended June 30, 2021 and 2020, respectively, that were included in deferred revenue at the beginning of the periods and did not recognize any revenue during these periods from performance obligations satisfied in previous periods.

Changes in the deferred revenue balance are driven primarily by the amount of new card fees recognized during the period, and the degree to which these reductions to the deferred revenue balance are offset by the deferral of new card fees associated with cards sold during the period.

3 unchanged sentences

(In thousands)

March 31, 2021

June 30, 2021

Corporate bonds $ 10,000 $ 7 $ — $ 10,007

11 unchanged sentences

Total investment securities $ 966,841 $ 6,178 $ ( 2,050 ) $ 970,969

As of March 31, 2021 and December 31, 2020, the gross unrealized losses and fair values of available-for-sale investment securities that were in unrealized loss positions were as follows:

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 4—Investment Securities (continued)

As of June 30, 2021 and December 31, 2020, the gross unrealized losses and fair values of available-for-sale investment securities that were in unrealized loss positions were as follows:

Less than 12 months 12 months or more Total fair value Total unrealized loss

1 unchanged sentence

(In thousands)

March 31, 2021

June 30, 2021

Agency bond securities $ 224,579 $ ( 6,260 ) $ — $ — $ 224,579 $ ( 6,260 )

1 unchanged sentence

Municipal bonds 13,638 ( 42 ) — — 13,638 ( 42 )

Asset-backed securities 3,043 ( 3 ) — — 3,043 ( 3 )

Total investment securities $ 962,021 $ ( 16,319 ) $ — $ — $ 962,021 $ ( 16,319 )

6 unchanged sentences

Our investment policy restricts our investments to highly liquid, low credit risk assets.

As such, we have no t recorded any significant credit-related impairment losses during the three months ended March 31, 2021 or 2020 on our available-for-sale investment securities.

Unrealized losses as of March 31, 2021 are the result of recent fluctuations in interest rates as our investment portfolio is comprised predominantly of fixed rate securities.

As such, we have no t recorded any significant credit-related impairment losses during the three and six months ended June 30, 2021 or 2020 on our available-for-sale investment securities.

Unrealized losses as of June 30, 2021 are the result of recent fluctuations in interest rates as our investment portfolio is comprised predominantly of fixed rate securities.

We do not intend to sell our investments, and we have determined that it is more likely than not that we will not be required to sell our investments before recovery of their amortized cost bases, which may be at maturity.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 4—Investment Securities (continued)

As of March 31, 2021, the contractual maturities of our available-for-sale investment securities were as follows:

As of June 30, 2021, the contractual maturities of our available-for-sale investment securities were as follows:

Amortized cost Fair value

6 unchanged sentences

The expected payments on mortgage-backed and asset-backed securities may not coincide with their contractual maturities because the issuers have the right to call or prepay certain obligations.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 5— Accounts Receivable

Accounts receivable, net consisted of the following:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(In thousands)

11 unchanged sentences

Accounts receivable, net $ 58,299 $ 67,755

Our net overdrawn account balances due from cardholders are a result of purchase transactions that we honor or maintenance fee assessments, in each case, in excess of the funds in the cardholder’s account.

Our net overdrawn account balances due from cardholders are a result of purchase transactions that we may honor or maintenance fee assessments, in each case, in excess of the funds in the cardholder’s account.

While we decline authorization attempts for amounts that exceed the available balance in a cardholder’s account, the application of card association rules, and the timing of the settlement of transactions, among other things, can result in overdrawn accounts.

Overdrawn cardholder balances from maintenance fee assessments are presented net of the consideration we expect to receive and are recorded as contra-revenue within card revenues and other fees.

Activity in the reserve for uncollectible overdrawn accounts from purchase transactions consisted of the following:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(In thousands)

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(In thousands)

March 31, 2021

June 30, 2021

Residential $ — $ — $ — $ — $ 3,108 $ 3,108

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Percentage of outstanding 4.0 % 3.2 % 6.3 % 13.4 % 86.6 % 100.0 %

Beginning in 2021, we introduced an optional overdraft protection program service on certain demand deposit account programs that allows cardholders who opt-in to spend a pre-determined amount in excess of their available card balance.

When overdrawn, these deposit accounts are reclassified as consumer loans.

Overdrawn balances are unsecured and considered immediately due from the cardholder.

Nonperforming Loans

1 unchanged sentence

See Note 2 — Summary of Significant Accounting Policies to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2020 for further information on the criteria for classification as nonperforming.

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(In thousands)

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Note 6—Loans to Bank Customers (continued)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Non-Classified Classified Non-Classified Classified

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Our TDR modifications involve an extension of the maturity date at a stated interest rate lower than the current market rate for new debt with similar risk.

As of March 31, 2021, none of our TDR modifications have been made in response to the COVID-19 pandemic.

The following table presents our impaired loans and loans that we modified as TDRs as of March 31, 2021 and December 31, 2020:

March 31, 2021 December 31, 2020

As of June 30, 2021, none of our TDR modifications have been made in response to the COVID-19 pandemic.

The following table presents our impaired loans and loans that we modified as TDRs as of June 30, 2021 and December 31, 2020:

June 30, 2021 December 31, 2020

Unpaid Principal Balance Carrying Value Unpaid Principal Balance Carrying Value

3 unchanged sentences

Allowance for Credit Losses

Activity in the allowance for credit losses in our loan portfolio consisted of the following:

Three Months Ended March 31,

Activity in the allowance for credit losses on our loan portfolio consisted of the following:

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(In thousands)

4 unchanged sentences

Balance, end of period $ 6,693 $ 570 $ 6,693 $ 570

Activity within our allowance for credit losses has increased during the comparable periods principally due to the introduction of our optional overdraft protection program services on certain demand deposit accounts.

Note 7— Equity Method Investment

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Under the equity method of accounting, the initial investment is recorded at cost and the investment is subsequently adjusted for, among other things, its proportionate share of earnings or losses.

However, given the capital structure of the TailFin Labs arrangement, we apply the Hypothetical Liquidation Book Value ("HLBV") method to determine the allocation of profits and losses since our liquidation rights and priorities, as defined by the agreement, differ from our underlying ownership interest.

The HLBV method calculates the proceeds that would be attributable to each partner in an investment based on the liquidation

GREEN DOT CORPORATION

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Note 7—Equity Method Investment (continued)

provisions of the agreement if the partnership was to be liquidated at book value as of the balance sheet date.

and priorities, as defined by the agreement, differ from our underlying ownership interest.

The HLBV method calculates the proceeds that would be attributable to each partner in an investment based on the liquidation provisions of the agreement if the partnership was to be liquidated at book value as of the balance sheet date.

Each partner’s allocation of income or loss in the period is equal to the change in the amount of net equity they are legally able to claim based on a hypothetical liquidation of the entity at the end of a reporting period compared to the beginning of that period, adjusted for any capital transactions.

Any future economic benefits derived from products or services developed by TailFin Labs will be negotiated on a case-by-case basis between the parties.

As of March 31, 2021, our net investment in TailFin Labs amounted to approximately $ 62.2 million and is included in the long term portion of prepaid expenses and other assets on our consolidated balance sheet.

We recorded equity in losses from TailFin Labs of approximately $ 1.6 million for the three months ended March 31, 2021, which is recorded as a component of other income and expense on our consolidated statement of operations.

As of June 30, 2021, our net investment in TailFin Labs amounted to approximately $ 61.5 million and is included in the long term portion of prepaid expenses and other assets on our consolidated balance sheet.

We recorded equity in losses from TailFin Labs of approximately $ 0.7 million and $ 2.8 million for the three months ended June 30, 2021 and 2020, respectively, and $ 2.3 million and $ 2.9 million for the six months ended June 30, 2021 and 2020, respectively, which are recorded as a component of other income and expense on our consolidated statement of operations.

Total equity in losses also includes income and losses from other investments that are not material to these consolidated financial statements.

1 unchanged sentence

Deposits are categorized as non-interest or interest-bearing deposits as follows:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(In thousands)

8 unchanged sentences

Total deposits $ 2,864,782 $ 2,735,116

Total deposit balances have increased substantially as compared to December 31, 2020, principally due to funds received by our cardholders from federal relief programs signed into law at the end of December 2020 and March 2021.

The scheduled contractual maturities for total time deposits are presented in the table below:

March 31, 2021

June 30, 2021

(In thousands)

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however, we may make voluntary repayments at any time prior to maturity.

As of March 31, 2021, we had no borrowings outstanding on the 2019 Revolving Facility and had the full amount available for use.

As of June 30, 2021, we had no borrowings outstanding on the 2019 Revolving Facility and had the full amount available for use.

GREEN DOT CORPORATION

7 unchanged sentences

We must also maintain a minimum fixed charge coverage ratio and a maximum consolidated leverage ratio at the end of each fiscal quarter, as set forth in the credit agreement.

At March 31, 2021, we were in compliance with all such covenants.

At June 30, 2021, we were in compliance with all such covenants.

If an event of default shall occur and be continuing under the facility, the commitments may be terminated and the principal amounts outstanding under the 2019 Revolving Facility, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable.

We did no t incur any cash interest expense related to our debt during the three months ended March 31, 2021.

Cash interest expense was $ 0.2 million for the three months ended March 31, 2020 .

We did no t incur any cash interest expense related to our debt during the three and six months ended June 30, 2021.

Cash interest expense was $ 0.4 million for the three months ended June 30, 2020 and $ 0.6 million for the six months ended June 30, 2020.

Note 10— Income Taxes

Income tax expense for the three months ended March 31, 2021 and 2020 differs from the amount computed by applying the statutory federal income tax rate to income before income taxes.

Income tax expense for the six months ended June 30, 2021 and 2020 differs from the amount computed by applying the statutory federal income tax rate to income before income taxes.

The sources and tax effects of the differences are as follows:

Three Months Ended March 31,

Six Months Ended June 30,

federal statutory tax rate 21.0 % 21.0 %

2 unchanged sentences

Employee stock-based compensation ( 2.9 ) 1.8

Nondeductible executive compensation 8.4 4.2

IRC 162(m) limitation 6.4 8.1

Nondeductible expenses 0.1 0.7

1 unchanged sentence

Effective tax rate 23.5 % 23.9 %

The effective tax rate for the three months ended March 31, 2021 and 2020 differs from the statutory federal income tax rate of 21%, primarily due to state income taxes, net of federal tax benefits, general business credits, employee stock-based compensation, and the Internal Revenue Code (IRC) 162(m) limitation on the deductibility of executive compensation.

The increase in the effective tax rate for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020 is primarily due to an increase in our expected pre-tax income and the corresponding rate impact on items such as general business credits and the IRC 162(m) limitation on the deductibility of executive compensation.

The overall increase in the effective tax rate for three months ended March 31, 2021 was partially offset by an increase of $ 3.3 million in excess tax benefits from stock-based compensation.

We recognized an excess tax benefit on stock-based compensation of $ 2.0 million for the three months ended March 31, 2021, compared to a $ 1.2 million discrete tax expense on shortfalls from stock based compensation for the prior year comparable period.

The effective tax rate for the six months ended June 30, 2021 and 2020 differs from the statutory federal income tax rate of 21%, primarily due to state income taxes, net of federal tax benefits, general business credits, employee stock-based compensation, and the Internal Revenue Code (IRC) 162(m) limitation on the deductibility of executive compensation.

The overall decrease in the effective tax rate for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020 is primarily due to a decrease of $ 1.1 million on the IRC 162(m) limitation on the deductibility of executive compensation and an increase of $ 3.1 million in excess tax benefits from stock-based compensation.

We recognized an excess tax benefit on stock-based compensation of $ 1.9 million for the six months ended June 30, 2021, compared to a $ 1.2 million discrete tax expense on shortfalls from stock based compensation for the prior year comparable period.

We have made a policy election to account for Global Intangible Low-Taxed Income ("GILTI") in the year the GILTI tax is incurred.

For the three months ended March 31, 2021, the provision for GILTI tax expense was not material to our financial statements.

For the six months ended June 30, 2021, the provision for GILTI tax expense was not material to our financial statements.

GREEN DOT CORPORATION

2 unchanged sentences

We establish a valuation allowance when we consider it more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

As of March 31, 2021, we did no t have a valuation allowance on any of our deferred tax assets as we believe it is more-likely-than-not that we would realize the benefits of our deferred tax assets.

As of March 31, 2020, we maintained a valuation allowance against our capital loss carryforwards as we believed it was more-likely-than-not that the tax benefits related to the capital loss carryforwards would not be realized.

As of June 30, 2021 and 2020, we did no t have a valuation allowance on any of our deferred tax assets as we believe it is more-likely-than-not that we will realize the benefits of our deferred tax assets.

During the six months ended June 30, 2020, we released our valuation allowance against our capital loss carryforwards, as we recognized capital gains on the sale of certain investment securities during that period sufficient to offset our capital loss carryforward amount.

We are subject to examination by the Internal Revenue Service, or IRS, and various state tax authorities.

2 unchanged sentences

The IRS initiated an examination of our 2017 U.S.

federal tax return during the second quarter June 30, 2020, and the examination remains ongoing as of March 31, 2021.

federal tax return during the second quarter ended June 30, 2020, and the examination remains ongoing as of June 30, 2021.

We do not expect the outcome of this examination will have any material impact on our consolidated financial statements.

As of March 31, 2021, we have federal net operating loss carryforwards of approximately $ 19.2 million and state net operating loss carryforwards of approximately $ 68.8 million, which will be available to offset future income.

As of June 30, 2021, we have federal net operating loss carryforwards of approximately $ 19.2 million and state net operating loss carryforwards of approximately $ 68.8 million, which will be available to offset future income.

If not used, the federal net operating losses will expire between 2026 and 2034.

Of our total state net operating loss carryforwards, approximately $ 46.6 million will expire between the fourth quarter of 2021 and 2040, while the remaining balance of approximately $ 22.2 million does not expire and carries forward indefinitely.

Of our total state net operating loss carryforwards, approximately $ 46.6 million will expire between 2023 and 2040, while the remaining balance of approximately $ 22.2 million does not expire and carries forward indefinitely.

The net operating losses are subject to an annual IRC Section 382 limitation, which restricts their utilization against taxable income in future periods.

In addition, we have state business tax credits of approximately $ 19.4 million that can be carried forward indefinitely and other state business tax credits of approximately $ 1.1 million that will expire between 2023 and 2027.

As of March 31, 2021 and December 31, 2020, we had a liability of $ 11.0 million and $ 9.5 million, respectively, for unrecognized tax benefits related to various federal and state income tax matters excluding interest, penalties and related tax benefits.

As of June 30, 2021 and December 31, 2020, we had a liability of $ 11.0 million and $ 9.5 million, respectively, for unrecognized tax benefits related to various federal and state income tax matters excluding interest, penalties and related tax benefits.

The reconciliation of the beginning unrecognized tax benefits balance to the ending balance is as follows:

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands)

4 unchanged sentences

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate $ 10,801 $ 9,660

As of March 31, 2021 and 2020, we recognized accrued interest and penalties related to unrecognized tax benefits of approximately $ 0.5 million and $ 0.6 million, respectively.

As of June 30, 2021 and 2020, we recognized accrued interest and penalties related to unrecognized tax benefits of approximately $ 0.6 million and $ 0.7 million, respectively.

Note 11— Stockholders' Equity

1 unchanged sentence

In May 2017, our Board of Directors authorized, subject to regulatory approval, expansion of our stock repurchase program by an additional $ 150 million.

As of March 31, 2021, we have an authorized $ 50 million remaining under our current stock repurchase program for any additional repurchases.

As of June 30, 2021, we have an authorized $ 50 million remaining under our current stock repurchase program for any additional repurchases.

Walmart Restricted Shares

2 unchanged sentences

Walmart is entitled to voting rights and participate in any dividends paid from the issuance date on the unvested balance, and therefore, the total amount of restricted shares issued are included in our total Class A shares outstanding.

As of March 31, 2021, there were 568,751 unvested shares outstanding.

As of June 30, 2021, there were 487,502 unvested shares outstanding.

The estimated grant-date fair value of the restricted shares is recorded as a component of stock-based compensation expense over the related period we expect to benefit under the term of our relationship with Walmart.

5 unchanged sentences

We have reserved shares of our Class A common stock for issuance under these plans.

The total stock-based compensation expense recognized was $ 17.2 million and $ 11.4 million for the three months ended March 31, 2021 and 2020, respectively.

The total stock-based compensation expense recognized was $ 8.4 million and $ 13.6 million for the three months ended June 30, 2021 and 2020, respectively, and $ 25.6 million and $ 25.0 million for the six months ended June 30, 2021 and 2020, respectively.

Restricted Stock Units

Restricted stock units with only service conditions for the three months ended March 31, 2021 was as follows:

Restricted stock units subject to service only conditions for the six months ended June 30, 2021 was as follows:

Shares Weighted-Average Grant-Date Fair Value

1 unchanged sentence

Outstanding at December 31, 2020

1,222 $ 36.24

Restricted stock units granted 697 48.24

1 unchanged sentence

Restricted stock units canceled ( 157 ) 39.30

Outstanding at March 31, 2021 1,288 $ 41.21

Outstanding at June 30, 2021

1,386 $ 42.21

Performance-Based Restricted Stock Units

Performance-based restricted stock unit activity for the three months ended March 31, 2021 was as follows:

Performance-based restricted stock unit activity for the six months ended June 30, 2021 was as follows:

Shares Weighted-Average Grant-Date Fair Value

5 unchanged sentences

Adjustment for completed performance periods 110 33.41

Outstanding at March 31, 2021 1,236 $ 39.50

Outstanding at June 30, 2021

1,154 $ 37.76

We grant performance-based restricted stock units to certain employees that are subject to the attainment of pre-established internal performance conditions, market conditions, or a combination thereof (collectively referred to herein as performance-based restricted stock units).

3 unchanged sentences

Stock Options

Total stock option activity for the three months ended March 31, 2021 was as follows:

Total stock option activity for the six months ended June 30, 2021 was as follows:

Options Weighted-Average Exercise Price

1 unchanged sentence

Outstanding at December 31, 2020

Options granted — —

1,634 $ 32.04

Options exercised ( 64 ) 28.23

Options canceled ( 362 ) 50.80

Outstanding at March 31, 2021 1,570 $ 32.19

Exercisable at March 31, 2021 404 $ 22.85

Outstanding at June 30, 2021

1,208 $ 26.60

Exercisable at June 30, 2021

GREEN DOT CORPORATION

2 unchanged sentences

The calculation of basic and diluted earnings per share (EPS) was as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(In thousands, except per share data)

22 unchanged sentences

The following table shows the weighted-average number of shares excluded from the diluted EPS calculation as their effects were anti-dilutive:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(In thousands)

12 unchanged sentences

For more information regarding the fair value hierarchy and how we measure fair value, see Note 2–Summary of Significant Accounting Policies to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2020.

As of March 31, 2021 and December 31, 2020, our assets and liabilities carried at fair value on a recurring basis were as follows:

As of June 30, 2021 and December 31, 2020, our assets and liabilities carried at fair value on a recurring basis were as follows:

Level 1 Level 2 Level 3 Total Fair Value

March 31, 2021 (In thousands)

June 30, 2021 (In thousands)

Corporate bonds $ — $ 10,007 $ — $ 10,007

13 unchanged sentences

Contingent consideration $ — $ — $ 5,300 $ 5,300

We based the fair value of our fixed income securities held as of March 31, 2021 and December 31, 2020 on quoted prices in active markets for similar assets.

We had no transfers between Level 1, Level 2 or Level 3 assets or liabilities during the three months ended March 31, 2021 or 2020.

The following table presents changes in our contingent consideration payable for the three months ended March 31, 2021 and 2020, which is categorized in Level 3 of the fair value hierarchy:

Three Months Ended March 31,

We based the fair value of our fixed income securities held as of June 30, 2021 and December 31, 2020 on quoted prices in active markets for similar assets.

We had no transfers between Level 1, Level 2 or Level 3 assets or liabilities during the three and six months ended June 30, 2021 or 2020.

The following table presents changes in our contingent consideration payable for the three and six months ended June 30, 2021 and 2020, which is categorized in Level 3 of the fair value hierarchy:

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(In thousands)

27 unchanged sentences

Fair Value of Financial Instruments

The carrying values and fair values of certain financial instruments that were not carried at fair value, excluding short-term financial instruments for which the carrying value approximates fair value , at March 31, 2021 and December 31, 2020 are presented in the table below.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 15—Fair Value of Financial Instruments (continued)

March 31, 2021 December 31, 2020

The carrying values and fair values of certain financial instruments that were not carried at fair value, excluding short-term financial instruments for which the carrying value approximates fair value , at June 30, 2021 and December 31, 2020 are presented in the table below.

June 30, 2021 December 31, 2020

Carrying Value Fair Value Carrying Value Fair Value

4 unchanged sentences

Deposits $ 2,864,782 $ 2,864,221 $ 2,735,116 $ 2,735,072

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 16— Leases

7 unchanged sentences

however, we may be contractually obligated to continue making lease payments where no termination option is available.

Our total lease expense amounted to approximately $ 1.3 million and $ 2.3 million for the three months ended March 31, 2021 and 2020, respectively.

Our total lease expense amounted to approximately $ 0.6 million and $ 2.2 million for the three months ended June 30, 2021 and 2020, respectively, and $ 1.8 million and $ 4.6 million for the six months ended June 30, 2021 and 2020, respectively.

Our lease expense is generally based on fixed payments stated within the agreements.

2 unchanged sentences

Supplemental information related to our ROU assets and related lease liabilities is as follows:

March 31, 2021

June 30, 2021

Cash paid for operating lease liabilities (in thousands) $ 5,893

1 unchanged sentence

Weighted average discount rate 4.8 %

Maturities of our operating lease liabilities as of March 31, 2021 is as follows:

Maturities of our operating lease liabilities as of June 30, 2021 is as follows:

Operating Leases

3 unchanged sentences

Total lease liabilities $ 18,658

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 17— Commitments and Contingencies

Financial Commitments

In May 2021, we announced that we entered into a definitive agreement to purchase the assets and operations of Tax Refund Solutions (“TRS”), a business segment of Republic Bank & Trust Company ("Republic Bank"), subject to customary closing conditions.

Pursuant to the terms of the definitive agreement, we have agreed to pay Republic Bank approximately $ 165 million in cash for the TRS assets.

We are seeking the Federal Reserve’s approval of or non-objection, as applicable, to the proposed transaction.

The parties are working to complete the proposed transaction in the third quarter of 2021.

As discussed in Note 7 — Equity Method Investment , we are committed to make annual capital contributions in TailFin Labs, LLC of $ 35.0 million per year through January 2024.

Our definitive agreement to acquire all of the equity interests of UniRush provides for a minimum $ 4 million annual earn-out payment for five years following the closing, ending in February 2022.

As of March 31, 2021, the estimated fair value of our remaining earn-out payments amounted to $ 4.3 million.

As of June 30, 2021, the estimated fair value of our remaining earn-out payments amounted to $ 3.3 million, and is recorded in the current portion of other accrued liabilities on our consolidated balance sheets.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 17—Commitments and Contingencies (continued)

Litigation and Claims

27 unchanged sentences

and (iv) contracts under which we may be required to indemnify our retail distributors, suppliers, vendors and other parties with whom we have contracts against claims arising from certain of our actions, omissions, violations of law and/or infringement of patents, trademarks, copyrights and/or other intellectual property rights.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 17—Commitments and Contingencies (continued)

Generally, a maximum obligation under these contracts is not explicitly stated.

2 unchanged sentences

For additional information regarding overdrafts on cardholders’ accounts, refer to Note 5 — Accounts Receivable.

GREEN DOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 18— Significant Retailer and Partner Concentration

3 unchanged sentences

Revenues derived from our products sold at retail distributors constituting greater than 10% of our total operating revenues were as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Walmart 23 % 29 % 24 % 27 %

In addition, approximately 16 % of our total operating revenues for the three months ended March 31, 2021 were generated from a single BaaS partner, without a corresponding concentration to our gross profit for the period.

In addition, approximately 20 % and 18 % of our total operating revenues for the three and six months ended June 30, 2021, respectively, were generated from a single BaaS partner, without a corresponding concentration to our gross profit for the period.

Note 19— Segment Information

11 unchanged sentences

We market our tax-related financial services through a network of tax preparation franchises, independent tax professionals and online tax preparation providers.

The Corporate and Other segment primarily consists of net interest income earned by our bank, eliminations of intersegment revenues and expenses, unallocated corporate expenses, and other fixed costs that are not considered when our CODM evaluates segment performance, such as salaries, wages and related benefits for our employees, professional service fees, software licenses, telephone and communication costs, rent and utilities, and insurance.

We do not evaluate performance or allocate resources based on segment asset data, and therefore such information is not presented.

GREEN DOT CORPORATION

1 unchanged sentence

Note 19—Segment Information (continued)

We do not evaluate performance or allocate resources based on segment asset data, and therefore such information is not presented.

We have restated segment information for the historical periods presented herein to conform to our current presentation.

1 unchanged sentence

The following tables present financial information for each of our reportable segments for the periods then ended:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Segment Revenue (In thousands)

7 unchanged sentences

Net revenue adjustments represent commissions and certain processing-related costs associated with our BaaS products and services, which are netted against our B2B Services revenues when evaluating segment performance.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Segment Profit (In thousands)

8 unchanged sentences

Amortization of acquired intangible assets 6,943 6,952 13,887 14,231

Impairment charges — 1,088 — 1,088

Other expense 1,753 3,583 3,802 4,298

1 unchanged sentence

Interest expense, net 38 443 75 684

Other (expense) income, net ( 1,086 ) 192

Other income, net 1,633 2,154 547 2,346

Income before income taxes $ 33,398 $ 7,101 $ 66,260 $ 65,901

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements